STORY OF THE WEEK: Harland & Wolff will concentrate on more sophisticated activities such as ship design and renewable energy, writes Jamie Smyth.

Walking through the 185-acre Titanic Quarter in Belfast's harbour district on Queens Island is a humbling experience for any history buff. At one time during the 1940s more than 30,000 workers - many from the predominantly Protestant back streets of east Belfast -- worked at the 150 year-old shipyard called Harland & Wolff.

Best known for building the ill-fated passenger liner, the Titanic, the Belfast shipyard - now majority owned by the Norwegian firm Fred Olsen Energy - dominated the commercial life of Belfast for much of the last century.

But although the twin cranes, Samson and Goliath, still dominate the Belfast skyline, observers now believe the yard is doomed.

Harland & Wolff's decision to issue 90-day protective notice to two-thirds of its remaining 386 staff on Monday sounded the death knell for Belfast's shipbuilding tradition. Management will now focus on developing a "single technically-led project management organisation", according to a statement issued by Harland & Wolff.

With just 25 manual workers left at the yard, the two RoRo vessels which will be completed for the British Ministry for Defence shortly - despite a multimillion pound cost overrun - are likely to be the last ships to leave Harland & Wolff's historic slipways.

The company will concentrate on more sophisticated activities such as ship design and renewable energy projects, which employ far fewer, better qualified, employees. A yard spokesman said it was very difficult to see how orders or shipbuilding opportunities could be consolidated.

The demise of the yard is no surprise following a tumultuous recent history, which has seen it become embroiled in expensive litigation with a major US customer Global Marine, and failure to land significant shipbuilding contracts. "Shipbuilding demand is not strong at present due to general difficult economic conditions," says Mr Tony Gray, an expert on shipping who works for the global maritime publication Lloyds List.

"But Harland & Wolff's problems go way back before the current situation and centre on fierce competition from the Far East, Japan and, more recently, South Korea."

The European Union has long accused South Korean shipbuilders of winning market share by selling ships below cost after receiving Government subsidies. For the first time in two years, the EU said last week it would allow temporary and limited state aid for shipbuilders to counter this threat.

It has also decided to take the row to the World Trade Organisation (WTO). The case is likely to go before the WTO by October 20th but, with nothing in the order book at Harland & Wolff, it is a case of "too little too late".

It is unlikely the British government or the Northern Ireland Assembly would favour pumping more cash into a company which has struggled to make a profit in its recent history.

Harland & Wolff's financial results show it made an operating loss of £7.4 million sterling on turnover of £45.2 million in 2001. After exceptional charges of £76.6 million - due to a write-off of debt in relation to the Global Marine dispute - the loss was £84 million.

In the previous year, the yard lost £32.4 million on turnover of £111.2 million, reflecting much greater shipbuilding activity undertaken during 2000. This was despite the availability of 9 per cent state intervention aid to support European shipbuilders from foreign competition - aid which was outlawed from December 2000.

Government statistics show that, in the 11 years since the yard was privatised in 1989, Harland & Wolff received £184 million in taxpayers' money in aid. It cost the public purse a further £625 million to privatise the firm in 1989. The total amount of funding supplied to Harland & Wolff between 1975 - the year the yard was nationalised and 1989 - is not known.

Many politicians in Northern Ireland have reached the end of their tether with shipyard management following its announcement of job losses this week. Sir Reg Empey, Minister of Enterprise, Trade and Investment, said he was "extremely disappointed" by Harland & Wolff's announcement.

Local Ulster Unionist councillor for east Belfast, Mr Jim Rodgers went further and said last night he felt he had been "misled" by Harland & Wolff during negotiations to save the yard in March.

The crux of local concerns centres on a number of controversial land deals completed by the shipyard and its major shareholder Fred Olsen Energy. In February 2001, Harland & Wolff sold its property arm to another British-based Fred Olsen subsidiary, Ivy Wood Properties, for £41 million.

The yard used this money to pay down debt in its shipbuilding division, while the Fred Olsen firm agreed a deal to develop an 80-acre parcel of land known as Titantic Quarter I jointly with the Belfast Harbour Commissioners. A year later the shipyard found that, due to low levels of shipbuilding, a further 80 acres was now surplus to requirements.

For development to take place, a redesignation of the yard's leases from purely shipbuilding leases to development leases was required from the Executive and Assembly. This redesignation was agreed by the Executive as part of a rescue plan for the shipyard, which would see Fred Olsen subsidiaries release £15 million to prop up Harland & Wolff and retain a workforce of approximately 386.

Titanic Properties Limited, the Fred Olsen subsidiary which will develop the land in conjunction with the Belfast Harbour Commissioners, said it could attract £1 billion investment into the Titantic area.

With the cost of preparing the 185 acres on the Titanic Quarter for development estimated at about £50 million, both Belfast Harbour Commissioners and Titanic Properties look set to reap significant long term rental gains.

"After speaking to Harland & Wolff, I've no doubt I was misled," said Mr Rodgers, who was one of several local politicians to lobby in favour of the redesignation. "As far as I'm concerned, Harland & Wolff's future is as a land developer... in one year, I believe the shipyard will cease to exist." Mr Rodgers said he may, together with other councillors, make it awkward for developers in the planning process.

"I would be prepared to use that tool against the company," he said.

The trade unions are similarly angry at the job losses.

Mr Andrew Kane, shop steward with the GMB union, said shipyard workers felt betrayed by company management at Harland & Wolff. "The deal [in March] they put to us was difficult for us as it meant 100 redundancies but we agreed because we thought it would save at least 320 jobs," he said. "It was a Hobson's Choice."

"We were just a lever for [the firm] to change the leases from shipbuilding land to development land. The deal changed that," he said. "It was a rip-off."

But with the skeleton of the first 50,000 sq ft building at the Northern Ireland Science Park already standing, and two further planning permissions due to be lodged next month, the future of the Titanic Quarter is not tied to shipbuilding.

Technology firms, bars, restaurants and apartments will dominate the 21st century on the site, which has been labelled the biggest waterfront development in Europe.

A draft plan due to be published shortly by Titianic Quarter Ltd should also include details of heritage sites to commemorate the Titanic.

Whether Harland & Wolff will still exist by the time these are complete is debatable.